partnership, high performance work systems and ...doras.dcu.ie/2424/1/wp0208.pdf · partnership,...

THE LEARNING, INNOVATION AND KNOWLEDGE (LINK) RESEARCH CENTRE WORKING PAPER SERIES

WP 02-08 http://www.link.dcu.ie/publications/workingpaperseries/

© 2008, LInK, Patrick C. Flood, Jim Guthrie, Wenchuan Liu, Cathal O’Regan Claire Armstrong, Sarah MacCurtain and Thaddeus Mkamwa

Contact: [email protected]

1

WP 02-08

Partnership, High Performance Work Systems and Organizational Effectiveness

Patrick C. Flood Jim Guthrie Wenchuan Liu Cathal O’Regan Claire Armstrong Sarah MacCurtain Thaddeus Mkamwa





2

THE LEARNING, INNOVATION AND KNOWLEDGE (LINK) RESEARCH CENTRE WORKING PAPER SERIES http://www.link.dcu.ie/publications/workingpaperseries/ © 2008, Partnership, High Performance Work Systems and Organizational Effectiveness, Patrick C. Flood, Jim Guthrie, Wenchuan Liu, Cathal O’Regan, Claire Armstrong, Sarah MacCurtain and Thaddeus Mkamwa Authors are responsible for the accuracy of citations, quotations, diagrams, tables and maps. The views expressed here do not necessarily reflect those of Learning, Innovation and Knowledge (LInK) Research Centre. All or part of this work may be reproduced for the purposes of study, research, criticism or review provided that the author and the Learning, Innovation and Knowledge (LInK) Research Centre are fully acknowledged.





3

Partnership, High Performance Work Systems

and Organizational Effectiveness

� � � � � � � � � � � � � � � � � � �

PATRICK C. FLOOD

JIM GUTHRIE

WENCHUAN LIU

CATHAL O’REGAN

CLAIRE ARMSTRONG

SARAH MACCURTAIN

THADDEUS MKAMWA

ABSTRACT

Using data gathered from 132 organizations operating in Ireland, we examined the

impact of high performance work systems (HPWS) and partnership on firm-level

performance. Our results reveal that HPWS and partnership practices are positively

associated with labour productivity, workplace innovation and negatively associated

with voluntary turnover. More specifically, both HPWS and partnership are positively

associated with labour productivity and employee retention, and the positive

relationship between partnership and workplace innovation is mediated by HPWS.





4

INTRODUCTION

There is an urgent need for further research on the impact of new partnership-style

arrangements on organizations, on management, on employees and on unions. As further

momentum grows behind partnership it becomes more important to have stories, which

show the implications for people and for thinking in management, employee relations and

human resources. There is also a need for careful and rigorous studies of the impacts:

studies, which quantify outcomes and demonstrate results (O’Connell, 2003: 75).

High performance work systems (HPWS), a set of human resource policies and

practices thought to encourage workforce skill and motivation, have gained much

attention in recent years. Many recent studies (e.g., Huselid, 1995; Guthrie, 2001,

Appelbaum et al., 2000; MacDuffie, 1995; Datta et al., 2005) have indicated a

positive relationship between the adoption of HPWS and firm outcomes. O’Connell

(2003) argues that high-performance HR practices are central to the notion of

“partnership”. Partnership denotes a philosophy of collaboration or mutuality between

management and employees for the purpose of organizational problem-solving and

functioning. Partnership also indicates an “employee-centred” organization design.

Similar to O’Connell’s views, authors in the strategic HRM literature (e.g., Guthrie,

2001) describe firms utilizing HPWS as employee-centred organizations. This is

because information and decision-making power is dispersed throughout the

organization with employees at all levels taking on greater responsibility for the

operation and success of the organization. Research in international settings has

suggested that, as a form of partnership, HPWS can help create and sustain

competitive advantage. We believe that managerial philosophies or values espousing

“employee partnership” may affect both the use of high performance HR practices

and firm performance.

In this paper, we examine the impact of HPWS together with partnership on three

important outcome measures: labour productivity, workplace innovation and

employee voluntary turnover. Our research question is whether partnership directly or

indirectly affects firm performance. We first review previous studies linking HPWS

and partnership to firm performance. We next present a description of our research

method and finally, report our findings and consider the implications.

High Performance Work Systems (HPWS)

High performance work practices have gained enormous popularity in recent years

and numerous strategic human resource management (SHRM) studies have examined

the impact of “bundles” of HR practices on organizational outcomes. A growing body

of work contains the argument that the use of a set of HR practices, including

comprehensive employee recruitment and selection procedures, compensation and

performance management systems, information sharing, and extensive employee

involvement and training, can improve the acquisition, development and retention of a

talented and motivated workforce (e.g., Arthur, 1994; Batt, 2002; Becker and Gerhart,





5

1996; Datta et al., 2005; Guthrie, 2001; Huselid, 1995; Huselid and Becker, 1996;

Jones and Wright, 1992; MacDuffie, 1995; United States Department of Labour,

1993). These HR practices are referred to as high involvement (e.g., Guthrie, 2001),

high commitment (Arthur, 1994), or high performance work systems (Datta et al.,

2005; Pfeffer, 1994, Huselid, 1995). The idea that a system of HR practices may be

more than the sum of the parts appears in discussions of synergy, external and internal

fit, bundles, holistic approaches, configurations, contingency factors, and so forth

(Datta et al., 2005; Huselid, 1995, Flood et al., 2003, Becker and Gerhart, 1996, Amit

and Shoemaker, 1993). Although there is debate as to the specific configuration of

practices constituting a high performance system, a system or set of human resource

management practices is considered to be more difficult to imitate than individual

HRM practices for competitors. Some work suggests “universal” HPWS effects (e.g.,

Huselid, 1995), while other work suggests that HPWS effects may depend on

conditions such as competitive strategy or industry (e.g., Datta et al., 2005). The

common theme in the SHRM literature is an emphasis on utilizing a system of human

resource management practices that provides employees with skills, information,

motivation and latitude, resulting in a work force that is a source of competitive

advantage.

Among a number of studies of HPWS, Huselid’s (1995) landmark study examined

the relationship between the use of HPWS and firm performance. His main finding

was that greater use of these types of HR practices was associated with decreased

turnover and higher levels of productivity and profitability. Since then many studies

have indicated a positive relationship between the adoption of an HPWS and firm-

level performance outcomes including productivity and innovation (e.g. CIPD, 2006;

Flood et al., 2004; Guthrie, 2001, Appelbaum et al., 2000; MacDuffie, 1995; Datta et

al., 2005).

Partnership in Organizations

Guest and Peccei (2001) describe partnership as a concerted effort by owners and

managers to create an environment where employees take a significant psychological

stake in the success of the organization. This is achieved through building high levels

of attachment, commitment, and involvement in the enterprise. In addition, a

partnership philosophy relies on both employees and management to focus on shared

goals and interests without being derailed by potentially different positions on specific

issues (Guest & Peccei, 2001). As such, partnership represents a philosophy of

integration and mutuality, with a move away from conflicting positions and

distinctions (Martinez-Lucio & Stuart, 2002).

Labour-management partnership embraces six principles: a focus on the quality of

working life, employer commitment to employment security, transparency in the

management of enterprise, the recognition of legitimate differences of interest, shared

commitment to the success of the enterprise and mutual gains.





6

McCartan discusses the primary values espoused by partnership philosophies

including: mutual trust and respect, a joint vision for the future, continuous

information exchange, employment security, and dispersed decision-making (2002: p.

60). Conceptually, partnership has been argued to increase productivity, boost quality,

provide a more motivated workforce, and precipitate drops in absenteeism and

turnover (Roscow & Casner-Lotto, 1998). In addition, it is likely that this focus on

the internal relationships within the firm will result in higher degrees of collaboration

and knowledge sharing, which ultimately builds social capital.

Empirical research on partnership has been somewhat mixed. Kelly and

Badigannavar (2005) examined employee outcomes of partnership in a medium-sized

non-union retail firm and found little evidence of “mutual gains” of employees and

management. In a case study of unionized British firms the espoused values of

partnership were linked to greater perceptions of trust in some organizations but not in

all employees (Dietz, 2004). Similarly, a study of trade union representatives found

acceptance of aspects of partnership including a commitment to less-adversarial

relations between labour and management, failed to find evidence that partnership-

based firms improved job security, transparency, involvement or work-life quality

(Martinez-Lucio & Stuart, 2002).

However, Guest and Peccei (2001) presented a framework for the analysis of

partnership, emphasizing the principles, practices and outcomes of partnership. Using

samples of 54 UK management and employee representatives, they found a link

between partnership principles and practices and employee attitudes and behaviour.

Their findings support mutual gains. In addition, partnership practices and principles

have been found to be a salient factor in the implementation of organizational change

initiatives (Bacon & Storey, 2000; Oxenbridge & Brown, 2002).

In addition, in previous studies, no evidence has shown if the observed

relationship between partnership and firm performance, either positive or negative, is

based on an environment with HPWS practices. Our study will focus on examining

the exact relationships between HPWS together with partnership and firm

performance. Next we present our research method.

METHOD

The empirical approach adopted here draws on previous work (e.g., Datta et al., 2005;

Guthrie, 2001; Guthrie, Spell & Nyamori, 2002). The basic procedure was to solicit

survey-based descriptions of management practices in the areas of communication

and participation, training and development, staffing and recruitment, performance

management and remuneration and partnership, and to match these with objective

indices of firm performance. Survey instruments were sent to the top HR manager in

sample firms. An additional person, typically the firm’s Managing Director was also

targeted for receipt of a secondary survey to establish inter-rater reliability and to

gather additional important information.





7

Sample

A mail survey which was designed according to the Total Design Method (Dillman,

2000) was executed in 2006. The sample of 1000 firms was drawn from “The Irish

Times Top 1000 Companies” database, which is a representative, multi-industry set of

Irish-based operations. The sample includes both indigenous Irish firms and foreign-

owned firms with operations in Ireland. In total, 241 companies participated; 132 of

them completed both surveys, resulting in an overall response rate of 13.2%. These

132 companies were representative of the larger top 1000 companies in Ireland in

terms of firm size, age of firm, type of industry and country of ownership. Analysis in

this paper is based on data from the 132 companies with responses to both surveys.

Responding organizations represented a variety of industries. Nearly one third of

participating companies were from manufacturing, including 7 percent from metal

manufacturing and 24 percent from other manufacturing. 27 percent of participating

companies were involved in service industries - finance, personal, recreational, health

and other services.

Of the organizations that responded, 50 percent (n=66) were subsidiaries of

foreign companies, including those from USA (25.8 percent, n=34), Germany (6.8

percent, n=9), and UK (5.3 percent, n=7). The remaining 50 percent were wholly Irish

owned organizations. The average firm had been established for about 37 years with a

median number of employees of 270. Average research and development investment

was 3.89 percent of annual turnover.

Measures

All measures were computed based on practices recommended in the literature

(Huselid, 1995; Guthrie, 2001; Datta et al., 2005; Guest and Peccei, 2001). Data

regarding HPWS was obtained from the HR manager survey. Data regarding

partnership was obtained from the secondary (GM) respondent survey. Data regarding

performance were obtained from both the HR manager and the secondary survey

respondent and were statically combined to form single measures for each of the three

performance-related outcomes, labour productivity, innovation and voluntary

turnover.

High Performance Work Systems

We used 18 HR practices from the areas of staffing, performance management and

remuneration, training and development and communication and employee

participation to form a single index representing a measure of HPWS. Since practices

vary across employee groups, questions relating to HR practices were asked

separately for two categories of employees. Group A comprised production,

maintenance, service and clerical employees; Group B comprised executives,

managers, supervisors and professional/technical employees. Sample items are “What

proportion of your employees from Groups A and B are administered one or more

employment tests (e.g., skills tests, aptitude tests, mental/cognitive ability tests) prior





8

to hiring? “What proportion of your employees from Groups A and B have received

intensive/extensive training in generic skills (e.g., problem-solving, communication

skills, etc.)? “What proportion of your employees from Groups A and B receive

compensation partially contingent on group performance (e.g., profit-sharing, gain-

sharing, team-based)? Using the number of employees in each occupational group, a

weighted average for each practice was computed. The reliability coefficient, as

measured by Cronbach’s alpha was 0.854. Table 1 lists a detailed description on

HPWS practices.

[Insert Table 1 here]

Partnership

Drawn from Guest and Peccei’s study (2001), we used a set of interrelated

management practices to measure partnership. Four practices were combined

(summed) to form a single index representing a measure of partnership. The

Cronbach’s alpha is .702. Table 2 presents these partnership items.


Labour Productivity

SHRM theorists have identified labor productivity as the crucial indicator of "work

force performance" (Delery & Shaw, 2001) and productivity has been used frequently

in a large body of work in the SHRM literature (Boselie & Dietz, 2003). Per other

work (e.g., Guthrie, 2001; Huselid, 1995), labour productivity was conceptualised as

revenue per employee. Data on the most recent estimates of total sales and total

employment were collected via questionnaire from both HR and the secondary

respondent. Labour productivity was calculated as total firm revenue divided by the

total number of employees. The computed intraclass correlation coefficient (ICC2 =

.830) across the respondents supports the reliability and aggregation of these data. A

log of the average of labour productivity from both questionnaires was used as a

dependent variable in the multiple regression analysis.

Workplace Innovation

Workforce innovation was measured by caclulating new (annual) sales revenue

divided by the number of employees in an organization. Each respondent was asked:

“What proportion of your organization’s total sales (turnover) comes from products or

services introduced within the previous 12 months?” The response to this question

was multiplied by total sales to yield an estimate of sales revenue generated by new

sales. This sales figure was then divided by the number of employees to obtain our

measure of workforce innovation – an indication of per capita sales derived from

recently introduced products or services. This measure captures a workforce’s ability

to work smart, i.e. impacting organizational efficiency and innovation through process





9

and product innovations. The (log of) the average of the HR and GM survey

responses was used in analyses. There was strong agreement, as indicated by the

computed intraclass correlation coefficient (ICC2 = .961).

Employee Turnover

Similar to past research (e.g., Guthrie, 2001; Huselid, 1995), the measure of firm

employee turnover rates was taken from responses to the following survey question

on the HR questionnaire: “Please estimate your annual voluntary employee turnover

rate (percentage who voluntarily departed your organization)”. This question was

asked separately for both categories of employees (Group A and Group B). A

weighted average of these separate estimates was computed to represent the overall

average rate of employee turnover for each firm.

Control Variables

Models controlled for a number of firm and industry variables. A measure of firm age

was obtained from the question “How long has your local organization been in

operation?” There was strong agreement across respondents (ICC2 = .961) and

responses were aggregated by taking the log transformation of the mean of both

respondents’ responses. The log of number of employees is used to indicate firm size.

Since there was strong agreement across respondents (ICC2 = .933), we aggregated

these responses. R & D investment was measured as a percentage of sales/turnover.

Respondents were given eighteen response categories and were asked. “Which

category (<1%, 1%, 2% ... 16%, >16%) best approximates the percentage of total

annual sales/turnover spent on research & development (R&D) in your organization?”

The average of the two respondents (ICC2 = .803) was used to estimate R&D

spending. We measured unionization by asking “What proportion of your workforce

is unionized?” Similar to the HR practice questions, a weighted average of Group A

and Group B employees was used to compute unionization. Firm competitive

strategy. was taken from a question directed to the GM respondent: “During 2005-06,

what proportion of your organization's total sales (turnover) was achieved through a

product differentiation strategy?” Skewness in this measure was corrected via a log

transformation. We also controlled for country of ownership, coding firms as either

Irish indigenous companies (=1) or foreign-owned firms (=0). Industry sector. Firms

were dummy-coded to indicate their membership in one of the following seven

industries: Agriculture, chemical, manufacturing, retail, services,

transportation/communication or financial. The average firm derived approximately

94% of its sales from the designated primary industry. This lack of diversification

supports the designation of a primary industry for sample firms. In the OLS analyses,

"financial" is the omitted benchmark industry variable.





10

ANALYSIS AND RESULTS

The threat of non-response bias exists whenever significant numbers of the targeted

population fail to respond. Given a relatively low response rate, we checked for

possible non–response bias using a “time trend extrapolation test” in which “late”

versus “early” respondents are compared along key study variables (first suggested by

Oppenheim, 1966). The assumption behind this test is that “late” respondents (those

responses received after the second round of mailing and follow-up telephone calls)

are very similar to non-respondents, given that they would have fallen into that

category without the follow-up efforts (Armstrong & Overton, 1977). T-tests

conducted showed no significant differences between “early” and “late” respondents

along any of the key study variables. This analysis suggests sample

representativeness.

We used ordinary least squares (OLS) regression analysis to examine our research

questions. Table 3 shows the means, standard deviations and correlations of study

variables.


Table 4 shows the results of the OLS regression analyses in which high

performance management practices and partnership predict the three performance

outcome measures of labour productivity, workplace innovation and voluntary

employee turnover. We also include our seven control variables (country of

ownership, industry sector, firm age, firm size, level of unionisation, R&D investment

and competitive strategy), to isolate effects above and beyond the influence of these

factors. .


In model 2, we examined the effects of HPWS and partnership on labour

productivity. Partnership was entered OLS first and accounts for 3.9% of variance in

labour productivity (p< .01). HPWS was entered second and explained an additional

10% of variance (p< .001). Thus, greater use of partnership and HPWS is associated

with increased labour productivity. If we conceive of HPWS as an

operationationalization of a partnership philosophy, this implies a mediating

relationship. That is, the affect of partnership on productivity may be partially due to

the increased likelihood that "partnering" firms will more likely use HPWS.

In discussing the process for examining proposed mediating effects, Baron and

Kenny (1986) denote the relationship between the independent variable and a

hypothesized mediator as Path a, the relationship between a hypothesized mediator

and a dependent variable as Path b, and the relationship between the independent

variable and dependent variable as Path c. According to Baron and Kenny:





11

A variable functions as a mediator when it meets the following conditions: (a) variations

in levels of the independent variable significantly account for variations in the presumed

mediator (i.e., Path a), (b) variations in the mediator significantly account for variations

in the dependent variable (i.e., Path b), and (c) when Paths a and b are controlled, a

previously significant relation between the independent and dependent variables is no

longer significant, with the strongest demonstration of mediation occurring when Path c

is reduced to zero (1986: 1176).

Following Baron and Kenny’s recommendation, we ran a series of OLS

regressions that suggested that HPWS partially mediates the partnership �

productivity relationship. A formal test confirms that HPWS partially mediates the

relationship between partnership and productivity (Sobel test statistic = 1.649; p

=.049, one-tailed).

In model 4, our analysis focused on workforce innovation. Partnership was

entered first and accounts for 1.4% of variance in workforce innovation (p< .10).

HPWS was entered second and explained another 5% of variance (p< .01) and

reduces the influence of partnership to non-significance. However, a partnership

philosophy does affect innovation directly, but instead leads to an increased

probability of HPWS use and, in turn, higher levels of innovation. A formal test

provides some support for the assertion that HPWS mediates the relationship between

partnership and innovation (Sobel test statistic = 1.450; p =.074, one-tailed).

In model 6, we analysed the effects of HPWS and partnership on employee

turnover. Partnership was entered first and accounts for 4% of variance in employee

turnover (p< .01). HPWS was entered second and explained an additional 1.9% of

variance (p< .10). The addition of HPWS does not significantly reduce the impact of

partnership on voluntary turnover. Thus, the impact of partnership on turnover is not

mediated by HPWS.

DISCUSSION

Our study reveals that increased use of high performance work systems (HPWS) and

partnership practices appears to be associated with very real benefits for employers in

the 132 organizations that comprised the sample for this research. Organizations that

made greater use of HPWS and espoused a partnership philosophy saw marked

increases in labour productivity and innovation and decrease in voluntary labour

turnover. When firms used well-developed partnership as well as HPWS, this resulted

in even more gains. From a practical standpoint, for the median firm in our sample,

our models indicate that increasing use of partnership and HPWS from “average” to

“above average” (i.e., from mean to mean plus one standard deviation) will generate

an additional 11 million Euro in sales revenue and 290,000 Euro from sales of new

products or services.. Furthermore, average voluntary turnover rates of 5.4% suggest

that the median sample firm loses approximately 15 employees each year. The affect

of HPWS and partnership practices would lead to the retention of an additional 1 -2





12

employees per years. Recent work suggests that voluntary turnover has substantial

negative implications for firm performance, often costing as much as 150% of the

departing employee’s annual salary (Cascio, 2006).

These findings serve to improve our understanding of the relationships between

high performance work systems together with partnership practices and firm level

effectiveness. We identified a set of separate yet interrelated and complementary work

practices and examined separate and combined effects of these practices on

organizational outcomes. Overall, our research reinforces the important role of HPWS

and partnership in creating value, improving innovation and reducing employee

turnover in organizations. The use of employee centred and partnership-oriented

principles and practices would seem to have a net benefit for employers.

However, a number of factors argue for caution in interpreting study results. First,

we cannot claim that the use of HPWS and partnership practices causes labour

productivity, workforce productivity and employee turnover. These data were

collected simultaneously and thus “cause” relationships may be reverse. While it is

more plausible to argue that HR systems and management practices influence

productivity, it is certainly possible that firms experiencing greater success are better

positioned to invest in these HR practices. Second, although we tested non-response

bias, whenever survey response rates are less than 100%, bias may be introduced into

the data. Third, although we show a positive association between partnership and

HPWS practices and productivity, innovation and employee turnover, we do not

explicate the relevant pathways (i.e., the proverbial “black box” problem). Therefore,

a further study should try to solve these limitations.

While our study cannot definitely that conclude that investment in HPWS and

partnership will lead to productivity and innovation increase, it does support the

proposition that increased use of HPWS and partnership will prove advantageous for

these firms. While much work remains in determining the pathways by which these

types of practices affect important organizational outcomes, we hope that both

academics and practitioners will find this study a meaningful contribution to the

SHRM literature.

REFERENCES

Amit, R., & Shoemaker, J. H. (1993). Strategic assets and organizational rents.

Strategic Management Journal, 14, 33-46.

Armstrong SJ & Overton TS. (1977). Estimating non-response bias in mail surveys.

Journal of Marketing Research 14: 396-402.

Arthur, J. B. (1994). Effects of human resource systems on manufacturing

performance and turnover. Academy of Management Journal, 37(3), 670-688.

Appelbaum, E., Bailey, T., Berg, P., & Kalleberg, A. (2000). Manufacturing

advantage: Why high-performance work systems pay off. Ithaca, London: ILR Press.





13

Bacon, N.; Storey, J.(2000)., "New Employee Relations Strategies in Britain:

Towards individualism or partnership", British Journal of Industrial Relations,

Vol.Sept. 38, 3, pp.407-428.

Baron, R.M., & Kenny, D.A. (1986). The moderator-mediator variable distinction in

social psychological research: Conceptual, strategic, and statistical

considerations. Journal of Personality and Social Psychology, 51, 1173-1182.

Batt, R. (2002). Managing customer service: Human resource practices, quit rates, and

sales growth. Academy of Management Journal, 45(3), 587-597.

Becker, B., & Gerhart, B. (1996). The impact of human resource management on

organizational performance: Progress and prospects. Academy of Management

Journal, 39(4), 779-801.

Boselie, P., Dietz, G., and Boone, C. (2005). ‚Commonalities and Contradictions in

HRM and Performance Research’. Human Resource Management Journal,

15(3), 67-94.

CIPD (2006). Achieving Best Practice in Your Business: High Performance Work

Practices: Linking Strategy and Skills to Performance Outcomes, London:

CIPD

Datta, D.K., Guthrie, J.P. & Wright, P.M. (2005). HRM and labour productivity: Does

industry matter? Academy of Management Journal, 48(1), 135-145.

Delery, J.E. & Shaw, J.D. 2001. The strategic management of people in work

organizations: Review, synthesis and extension. In. K.M. Rowland & G.R.

Ferris (eds). Research in Personnel and Human Resource Management,

Greenwich, CT: JAI Press, 165-197.

Dietz, G. 2004. Partnership and the development of trust in British workplaces.

Human Resource Management Journal 14(1): 5-24.

Dillman, (2000). Mail and Internet Surveys (2nd ed.). New York: John Wiley & Sons,

Inc.

Flood, P., Guthrie, J., Liu, W., & MacCurtain, S. (2005). High Performance Work

Systems in Ireland: The Economic Case. Dublin: National Centre for

Partnership and Performance.

Flood, P., MacCurtain, S. & West, M. (2001). Effective Top Management Teams: An

International Perspective, Blackhall: Dublin.

Flood, P., Ramamoorthy, N. & Liu, W. (2003). Knowledge and Innovation: Diffusion

of HRM Systems. Scandinavian Journal of Business Research, 1(17), 59-68.

Guest, D. and Peccei, R. (2001). Partnerhsip at work: Mutuality and the balance of

advantage. British Journal of Industrial Relations. 39 (2): 207-236.





14

Guthrie, J. P. (2001). High involvement work practices, turnover and productivity:

Evidence from New Zealand. Academy of Management Journal, 44, 180-190.

Guthrie, J.P., Spell, C. & Nyamori, R. (2002). Correlates and consequences of high

involvement management: The role of competitive strategy. The International

Journal of Human Resource Management, 13(1), 183-197.

Huselid, M. A. (1995). The Impact of Human Resource Management Practices on

Turnover, Productivity, and Corporate Financial Performance. Academy of

Management Journal, 38, 635-672.

Huselid, M. A., & Becker, B. (1996). Methodological issues in cross-sectional and

panel estimates of the HR-firm performance link. Industrial Relations. 35:

400-422.

Jones, G. R., & Wright, P. M. (1992). An economic approach to conceptualising the

utility of human resource management practices. In K. M. Rowland & G. R.

Ferris (Eds.), Research in personnel and human resources management.

Greenwich, CT: JAI Press.

Kelly, J. and Badigannavar, V. (2005). Labour-management partnership in the non-

union retail sector. International Journal of Human Resource Management

16(8): 1529-1544.

MacDuffie, J. P. (1995). Human Resource Bundles and Manufacturing Performance:

Organizational Logic and Flexible Production Systems in the World Auto

Industry. Industrial and Labor Relations Review, 48, 197-221.

Martinez-Lucio, M., Stuart, M. (2002), Assessing partnership: the prospects for, and

challenges of, modernisation, Employee Relations, Vol. 24 No.3, pp.252-61.

O’Connell, L. (2003). Achieving high performance: Partnership works – The

international evidence. Forum on the Workplace of the Future, National

Center for Partnership Performance.

Oxenbridge, S., Brown, W.A. (2004), "Developing partnership relationships: a case of

leveraging power", in Stuart, M., Martinez-Lucio, M. (Eds),Partnership and

Modernisation in Employment Relations, Routledge, London.

Pfeffer, J. (1994). Competitive advantage through people. Boston: MA: Harvard

Business School Press.

Rosow, Jerome M., Jill Casner-Lotto (1998). Participation, Achievement, Reward:

Creating Infrastructure For Managing Continuous Improvement. Part III:

Reward. Scarsdale, NY: Work In America Institute, Inc., 84 pp.

United States Department of Labour. (1993). High performance work practices and

firm performance. Washington, D.C.





15

TABLES AND FIGURES

Table 1: High Performance Work Practices in Irish Companies

Staffing:

What proportion of your employees..... Score

Are administered one or more employment tests (e.g., skills tests, aptitude tests,

mental/cognitive ability tests) prior to hiring? 24.19%

Are hired on the basis of intensive/extensive recruiting efforts resulting in many qualified

applicants? 57.67%

Hold non-entry level jobs as a result of internal promotions (as opposed to hired from

outside of the organization)? 34.37%

Hold non-entry level jobs due to promotions based upon merit or performance, as opposed

to seniority? 44.99%

Training & Development:

What proportion of your employees..… Score

Have been trained in a variety of jobs or skills (are "cross trained") and/or routinely

perform more than one job (are "cross utilized")? 53.72%

Have received intensive/extensive training in company-specific skills (e.g., task or firm-

specific training)? 73.58%

Have received intensive/extensive training in generic skills (e.g. problem-solving,

communication skills, etc.)? 37.23%

Performance Management & Remuneration:


Receive formal performance appraisals and feedback on a routine basis? 67.32%

Receive formal performance feedback from more than one source (i.e., feedback from

several individuals such as supervisors, peers etc.)? 20.57%

Receive compensation partially contingent on group performance (e.g., profit-sharing,

gainsharing, team-based)? 34.44%

Are paid primarily on the basis of a skill or knowledge-based pay system (versus a job-

based system)? That is, pay is primarily determined by a person's skill or knowledge level

as opposed to the particular job that they hold

28.16%

Communication & Participation:


Are involved in programmes designed to elicit participation and employee input (e.g.,

quality circles, problem-solving or similar groups)? 36.88%

Are provided relevant operating performance information (e.g., quality, productivity, etc.) 72.22%

Are provided relevant financial performance information? 68.04%

Are provided relevant strategic information (e.g., strategic mission, goals, tactics,

competitor information, etc.) ? 67.41%

Are routinely administered attitude surveys to identify and correct employee morale

problems?. 37.63%

Have access to a formal grievance/complaint resolution procedure 96.17%

Are organized in self-directed work teams in performing a major part of their work roles? 36.09%

Average

score

HPWS 48.81%





16

Table 2: Partnership Items

Item Definition

There is a high level of trust between management and

employees

Strongly disagree=1;

2; 3; 4;

Strongly agree=5.

Employees are well informed on the views and concerns of

company management


2; 3; 4;

Strongly agree=5.

Company management are well informed on the views and

concerns of employees


2; 3; 4;

Strongly agree=5.

Workplace partnership is… 0 (Non-existent);

1 (Largely confined to a few key

individuals);

2 (Largely confined within

formal partnership structures);

3 (Evident in at least certain

parts);

4 (Evident across most of it);

5 (Now the norm for working).





17

Table 3: Means, Standard Deviations and Correlations

N= 109; * p < 0.05; ** p < 0.01; *** p < .001 (one-tailed tests)

Mean SD 1 2 3 4 5 6 7 8 9 10

1. HPWS 48.77 18.80

2. Partnership 7.62 1.70 .278***

3. Labour

Productivity -1.16 1.10 .333*** .170*

4. Workplace

Innovation .51 2.02 .185* .080 .261***

5. Employee

Turnover 1.69 1.13 -.172* -.211** -.170* -.011

6. Country of

ownership .53 .50 -.388*** -.202** -.168* .071 .080

7. Firm Age 3.27 .74 -.199** -.161* -.021 -.140 -.115 .189*

8. Firm Size 5.63 1.18 .035 .079 -.471*** -.342*** .219** .002 .246**

9. R&D 3.74 4.27 .349*** .152* .008 .081 -.165* -.191* -.123 .047

10. Unionisation 34.93 35.73 -.059 .132 -.050 -.117 -.247** -.093 .332*** .308*** .047

11. Diff strategy 3.23 2.32 .062 .008 -.002 .080 -.059 -.044 -.009 -.115 .203** -.081

18


VOLUME 1(2), 2008 http://www.link.dcu.ie/publications/workingpaperseries/

© 2008, LInK, Patrick C. Flood, Jim Guthrie, Wenchuan Liu, Cathal O’Regan, Claire Armstrong, Sarah MacCurtain and Thaddeus Mkamwa


Table 4: Multiple Regression Analysis on Labour Productivity, Workplace

Innovation and Employee Turnover a b c

Labour productivity Workplace innovation Employee turnover

VARIABLES Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Control Variables β β β Β β β

Country of ownership -.177* -.079 .149 .228* -.045 -.084

Agric/Energy/Const. Industry -.089 -.030 -.109 -.073 -.047 -.075

Chemical Prods. Industry .055 .090 -.012 .015 -.105 -.116

Mfg. Industry -.142 -.060 .076 .133 -.138 -.177

Retail Industry .081 .150 .119 .165 -.022 -.038

Service Industry -.095 -.049 -.023 .016 -.072 -.100

Transport/Commun. Industry -.111 -.059 -.118 -.086 -.220* -.241*

Firm Age .131 .160* -.119 -.106 -.204* -.217*

Firm Size -.526*** -.549*** -.308** -.327** .405*** .409***

Unionization .066 .087 .104 .127 -.229* -.235*

R%D Intensity

-.001 -.084 .092 .026 -.170 -.125

Firm competitive strategy -.118 -.112 .203* .204* -.012 -.016

Independent Variable

1. Partnership .216** .156* .127* .088 -.221* -.189*

2. HPWS .373*** .266** -.163†

∆R2 .039** .100*** .014† .050* .040* .019†

Model R2 .355 .455 .364 .314 .287 .306

Model F 4.016*** 5.606*** 2.627** 3.075*** 3.003*** 3.017***

a financial Industry is the omitted benchmark industry variable.

b R

2 values are unadjusted.

c Standardized regression coefficients are shown.

*** p < .001; ** p < .01; * p < .05; † p < .10; all tests are two-tailed.

partnership, high performance work systems and ...doras.dcu.ie/2424/1/wp0208.pdf · partnership,...

Documents